Moody's lifts Propex to SGL-2

Moody's Investors Service said it upgraded the speculative grade liquidity rating for Propex Inc. to SGL-2 from SGL-3 following an amendment to the company's credit agreement that provided covenant relief for the period to March 31, 2008. The company sought the amendment following operating weakness, including declining sales and profitability, resulting from a cyclical slowdown in residential construction and overall economic activity.

The SGL-2 rating reflects Moody's expectations of good liquidity over the next 12 months, and the upgrade is supported by cash on the balance sheet, improved flexibility afforded by covenant relief and the agency's expectation that cash flow from operations should be sufficient to cover Propex's modest capital expenditures and working capital swings in the period.

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